This California county took in $3.7 million in pot fees. Now it might ban cultivation

Earlier in his work life, Prapanna Randall Smith earned a doctorate in educational leadership and founded a nonprofit elementary and preschool in San Diego County. Soon after retiring in 2011, he moved to forested Calaveras County to pursue another intellectual passion: growing marijuana.

The economically depressed county of 45,000 residents, a former mining and timber region, had an established pot growing tradition. And last year, after the devastating Butte Fire scorched vast areas of the county, destroying 860 houses, its Board of Supervisors plotted a comeback by seeking to monetize the thriving local marijuana culture by taxing and licensing for-profit cultivation.

Smith, who loves the science of climate-controlled indoor growing, was among the first to get a county permit. His Magic Show LLC cannabis business, located in a warehouse in a light industrial zone, has passed inspections by law enforcement and county code enforcement officials. He says he makes a good living selling to California medical marijuana dispensaries. But more importantly, Smith insists, pot production is giving his beleaguered county a chance to prosper.

“This can be one of the richest counties, per capita, in America,” he said.

Calaveras, however, is poised to become a less pot-friendly place. The Board of Supervisors now is considering reversing course and banning all commercial marijuana farms, complaining that the county’s cannabis business experiment is bringing in unwanted outsiders, rogue growers and environmental degradation.

But the board’s dilemma is that the county already is spending pot dollars. It has collected $3.7 million in fees from marijuana growers and hired additional police and staff while budgeting services with expectations of additional cannabis tax revenues. Layoffs loom if the supervisors approve the cultivation ban later this summer without a fiscal solution.

Last year, 737 marijuana growers with proof of residency met a June 30 deadline to pay fees of $5,000 each to apply for a permit for commercial cultivation. A ballot initiative passed by voters in November imposed a tax of $2 per square foot for outdoor gardens and $5 per square foot for indoor cultivation.

The county to date has approved 89 cultivation licenses, denied 137 applications for not meeting land use requirements and still is considering 478, with 33 would-be growers withdrawing their applications.

New supervisor Clyde Clapp says the conservative county’s embrace of marijuana liberalism is proving disastrous, pot revenues or not. He said Calaveras has become a destination for criminal growers who have no interest in operating in the legal marijuana economy, let alone in accordance with county rules.

Clapp is one of four new board members. Two incumbents who favored the county’s permissive marijuana regulations were defeated in November and two others previously decided not to seek re-election.

“We needed to push back. That’s why I ran for supervisor,” said Clapp, a local property manager who was elected on an anti-cultivation platform. “It’s basically like the Wild West out here.”

Clapp said the pot issue is creating “a cultural clash.” He lives in a golf course community called Rancho Calaveras. Even there, he says, people are erecting marijuana greenhouses on 3-acre lots. Just outside the neighborhood, Clapp had planned to plant a vineyard on a 5-acre property. But he felt frustrated, and unsafe, because of a next door neighbor’s outdoor pot farm.

“This is not the utopia that people talked about,” Clapp said.

In late May, a procession of marijuana cultivators packed the Board of Supervisors chambers to protest a newly drafted ordinance that proposes banning all commercial cultivation. Farmers would have to clean up properties within 90 days if the board approves a ban.

Cannabis farmer Bill Hand, a towering man with a muscular frame and a gray beard, angrily challenged the board to assess what they were considering. “It’s ban or bankruptcy,” he said. “Make a decision.”

Hand, 54, was a mortgage banker for 18 years before going into the marijuana business. His cannabis farm, with the county’s maximum allowable 22,000 acres of cultivation, produces 900 pounds of marijuana during the fall outdoor harvest. Crunching the numbers, he said he’s due to pay the county $40,500 in cultivation taxes.

Speculating that there are 350 farms of similar scale, he said Calaveras County may be turning its back on more than $14 million in badly needed tax revenues, on top of licensing fees that may have to be returned.

The former mortgage broker’s calculation on pot’s value to Calaveras was backed up by a local economic analysis prepared this year by the University of Pacific’s Center for Business Policy Research. The study, paid for by a Calaveras County lumber company supporting a regulated local marijuana economy, valued cultivation in the county at $251.5 million and said the pot industry would produce 2,600 jobs.

Addressing supervisors, Joan Wilson, a cannabis farmer who grows 3,000 square feet of plants on a 20-acre parcel, recounted a litany of local economic downturns: the decline of mining starting with closure of Calaveras’ legendary Sheep Ranch gold mine in 1942; the shuttering of sawmills in ensuing decades; and the closure of a major cement company in the 1980s.

“The people who live here have seen industries go away and have seen the effects,” Wilson said. She added: “The United States government has not been able to eradicate cannabis. So what do you think you are really going to be able to do. And with what money?”

The pot explosion has been a challenge for local law enforcement. After the Butte Fire, illicit growers – mostly non-residents – parked battered trailer homes on burned out lots and planted pot farms, many siphoning water from streams and dumping pesticides.

Sheriff Rick DiBasilio gave a grim report to supervisors at the recent meeting. “We are getting a flood of illegal growers because the mentality is that we will never be able to enforce the law or the (county marijuana regulation) ordinance,” he said.

Since last year, the Sheriff’s Department has made 71 arrests, destroyed 75,000 marijuana plants, and confiscated 13,000 pounds of dried pot and 5.9 pounds of cannabis concentrates from operators who weren’t permitted to grow in the county. DiBasilio estimates there are still 600 illegal pot farms in the county.

Mike Gonsman, 71, a retired rancher who runs a 10-acre rescue farm for horses, dogs, cats and other animals, says he has seen – and smelled – more than he can tolerate. A Navy veteran who served on a mine-sweeper boat in Vietnam, Gonsman took to collecting signatures for a local initiative – Measure B – that sought to ban commercial marijuana farm.

A legal challenge by opponents over the wording of the measure blocked it from the ballot. But Gonsman says he isn’t giving up the fight. “I’ve got marijuana all around me,” he said. “It’s skunk weed. It smells like a skunk. And we have an issue with that kind of thing.”

County officials say there may be issues in getting rid of illegal or unwanted marijuana gardens without cannabis industry revenue. The county already has spent $1.7 million of the $2.3 million in permit fees it had budgeted for the 2017-2018 fiscal year to pay for 26 new county positions, 23 of which have been filled.

DiBasilio said he would have to get rid of eight deputies and two technicians hired for the county’s marijuana enforcement program through the permit fees. Building official Mike Renner said his three enforcement officers also would have to go, imperiling efforts to enforce code violations against unlicensed growers. “The abatement program would become unmanageable,” he said.

Smith, of Magic Show LLC, operates 2,500 square feet of indoor growing space. On top of his $5,000 permit fee, he paid $6,250 to the county as the first installment on his $12,500 commercial cultivation tax bill. He said he hopes the county finds a solution. If it doesn’t, he is moving on.

“If they go with a ban and dismantle this industry, I will go somewhere else – Sacramento, the Bay Area – anywhere else in the state where they allow (marijuana) regulation,” he said. “We love it here. ... We want to stay. But if we’re not welcome, we will leave. And that will be sad.”

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A singing Calaveras pot farmer and a cannabis opponent engage in a unique debate

At a raucous forum on a proposed ban on commercial marijuana farms, a singing farmer and a cannabis opponent engage in a unique debate.